Have you ever stopped and asked yourself…
Am I Charging Enough For My Products and Services?
And early on, I struggled to find an answer to this very same question.
For longer than I care to remember, choosing a price point for my products and services was at best, painful.
For years this problem was the biggest obstacle I faced as small business owner [SBO].
The question of what price to charge continues to cloud the decisions made by small business owners, worldwide.
In fact, many SBO’s have admitted that they don’t actually know how to set pricing for their products and services.
In responding to this question, often-times SBO’s will severely reduce their profitability by underpricing their goods and services in an attempt to try and ‘beat’ their competitor’s pricing.
I can tell you from personal experience, that this sort of short sighted decision making can be due to the fear of losing a customer, and or being seen as too expensive.
So much so that it stops many SBO’s from charging what they should for the products and services they offer.
What ever the reason, not charging enough can and does cause small businesses to fail and go out of business. And this is at a time when their direct competition are charging much higher prices and prospering.
If you’re a small business owner struggling with what price to charge for your products and services, stop and take a look at your competitors…and you will most likely find someone charging a lot more than you for a comparable product or service.
There are just so many SBO’s driven by the fear that having higher prices damages their ability to survive, let alone prosper. This assumption is damaging to the long term viability of SBO’s who think this way.
I recently did an experiment where I increased my prices by 30% overnight. At the same time, I made our products and services more exclusive and dramatically reduced their availability. And the results were both shocking and amazing!
Most obvious to us was that this change eliminated the bottom 20% of customers who we did not want to do business with. That is to say, customers who were shopping purely on the dollar value of our products and services.
What this seemingly mad price hike helped us do is to rapidly identify better quality customers who valued what we do and what we actually provided, not the amount we charged. On top of that, we now have less operational stress as we have less complaints and we also have a lot more time.
What does this mean to your business?
Well, it’s saying that you can and should, raise your prices right now to improve your business.
Don’t stop there…go ahead and test a number of different price points to maximise your returns.
Don’t just raise your price once and settle for marginal improvement, find out what the market is able and willing to pay, and only then set your price.
Further to that, if you have a single pricing structure e.g. one-off-payment, add and test three-part-payments and so on. Test, test, test!
If you’ve been plucking price points from your behind up to now, do the research, find out what your competitors are charging, make the change based on what you find, test and tweak until you arrive at your optimal price point, and start attracting maximum return for your effort.
What’s your current pricing strategy?
Do you even have one, or are you leaving money on the table?
As per normal, leave me your comments below…I’d love to hear your strategy!
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